Post on 20-Dec-2015
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Uzair A.K. Ghouri
FORMATION OF A COMPANY
• Memorandum of Association• Article of Association• Registration of Memorandum and Article•Effect of Registration• Prohibition of Certain Names
Uzair A.K. Ghouri
COMPANIES
Company
Private
Single Member
Company
Other Private Company
Public
Listed Company
Unlisted Company
Uzair A.K. Ghouri
MEMBERS LIMIT Private Company
Single Member Company (SMC) only one member is required.
Other Private Companies require minimum two (2) members
Public CompanyListed Companies require minimum 7
membersUnlisted Companies require minimum 3
members
Uzair A.K. Ghouri
PRIVATE COMPANY u/s 2(1) (28) a company which by its
articles Restrict the right to transfer sharesSet limit of maximum numbers of member
to 50Prohibit any invitation to the public to
subscribe for the shares, if any, or debentures of the company
Uzair A.K. Ghouri
PUBLIC COMPANY u/s 2 (1) (30) a company which is not a
private companyRight to transfer sharesNo Upper limit for members Invitation is allowable for public to
subscribe the shares, if any, or debentures of the company
Uzair A.K. Ghouri
PRINCIPAL CHARACTERISTICS OF A COMPANY Separate legal entity Perpetual Succession: it never dies Capacity to sue and being sued Common seal
Uzair A.K. Ghouri
STAGES OF FORMATION Promotion Stage Name Registration Memorandum of Association Article of Association Other Documents
Uzair A.K. Ghouri
PROMOTION STAGE Discovery of a business opportunity and
arrangement of funds, property, etc. Persons who initiate the work of forming
a company are called promoters
Uzair A.K. Ghouri
NAME OF A COMPANY This is the First Step of Incorporation Application to be made to SECP Prescribed Fees
200 for online500 for Physical Submission
Uzair A.K. Ghouri
RESTRICTION AS TO NAMES Should not be inappropriate, deceptive
or design to exploit religion susceptibilities of people
Should not have close resemblance or identical to name of existing companies
Uzair A.K. Ghouri
MEMORANDUM OF ASSOCIATION It is the constitution and fundamental law
of the company on the basis of which the company regulates its external affairs
It containsName of the CompanyProvince of registered office or part of
Pakistan not forming part of ProvinceObject of the Company (Company cannot go
beyond the objects so mentioned in memorandum)
Liabilities of membersAuthorized Share Capital
Uzair A.K. Ghouri
REQUIREMENTS FOR MEMORANDUM Shall be printed Divided into paragraph Signed by each subscriber
Uzair A.K. Ghouri
ARTICLE OF ASSOCIATION Rules, Regulation and By-Laws for
internal management of a Company Subordinate to memorandum Contains:
Minutes of the MeetingVoting rightsDirectorsAuditorsDividends and Reserves etc.
Uzair A.K. Ghouri
REQUIREMENTS FOR ARTICLES In case of company limited by shares
Can adopt Table APrepare its own articlesPrepare a combination of the above
Uzair A.K. Ghouri
DIFFERENCE BETWEEN MEMORANDUM AND ARTICLE Memorandum is the charter of the
Company whereas articles contain rules for internal management
Articles are subordinate to Memorandum
Its mandatory to have memorandum but not articles
Memorandum defines external relationships whereas articles reflects internal management
Uzair A.K. Ghouri
CERTIFICATE OF INCORPORATION If the registrar is satisfied:
from all legal formalities, and formed for Lawful purpose
He will issue a certificate of incorporation
Uzair A.K. Ghouri
INCORPORATION SIGNIFIES Separate Legal Entity Perpetual Succession Common Seal